Macroeconomics: Comments

Running head : MACROECONOMICS : COMMENTSMacroeconomics : Comments[Author][University]Macroeconomics : CommentsAnswer 1 .1One of the advantages of using financial form _or_ system of establishment would be the fact that all of the policies under this regime are all highly impersonal since all of the decisions to make regarding the author of the providence are all based on the observational data and non on the place judgment of the organisation authorities . Moreover , monetary indemnity is more tensile than fiscal indemnity since the Federal Open Market direction meets ab go forth every six weeks to make decisions regarding the condition of the economy and the immediate implementation of the said decisions (Faculty .etsu .edu 2007 . On the other elapse , one of the possible draw back from using monetary policy would be the fact that monetary policy only(prenominal) offers short term economic activity and do not guarantee a sustainable activity in the ample run . Moreover , monetary policy throne advantageously be affected by external factors such as oil price hike and exchange invest which has a direct effect on the performance of any monetary policy the federal government currently haveAs for the advantages of fiscal policy , this can increase the government revenue through the put to work of raising the tax rate and /or tariff on import goods . Moreover , fiscal policy can besides attract productivity as the government provides incentives to those domestic and orthogonal investors just to keep the economy in balance . On the other hand , fiscal policy , is relatively slight flexible a compared to the monetary policy since it takes a pine time before the government officials make decisions regarding the economic conditions of the area . Oftentimes , they only meet once a grade to settle all of the economic policies that the federal government leave behind implement for the rest of the year . Moreover , fiscal policy intervenes into the private field which sometimes causes economic losses on the part of the consumers and the producers , like tax .

Fiscal policy is likewise highly subjective and usually based on the regard as judgment of the federal officials even if there are empiric facts at handAnswer 1 .2One of the possible factors that trigger crowding out would be through expanding the government borrowing in to pay an increase in expenditure . Cutting of tax can also lead to crowding out since private sector is being `crowd out from their investment through high spare-time activity rate . In other words , when the government raises its borrowing in the money market , it causes an increase of the interest rate in the market which `crowds out private investors and individuals from the lending marketAnswer 1 .3Automatic stabilizers like reduction on tax rate tend to mitigate output fluctuation without any intelligible government action therefore there is no deprivation for the government to make discretionary policies or make value judgment regarding a certain economic situation since voluntary stabilizers already reduces the `economic problems that the government officials will have to solveAnswer 2 .1Whenever there is a high inflation rate active in the economy , what...If you want to get a replete essay, order it on our website: Orderessay

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